Global watchdog likely to put Pakistan in ‘Grey List’

At the FATF meeting later this month Pakistan will have to not only submit an action plan to control terrorism funding but also give a political undertaking if it has to escape being grey-listed

NEW DELHI: Pakistan is likely to face major embarrassment ahead of its parliamentary elections in July, with the global money laundering watchdog Financial Action Taken Force (FATF) expected to announce at its plenary meet in Paris at the end of this month Pakistan’s inclusion in its ‘grey list’ for failing to control terrorism financing.

The intergovernmental FATF had at its last plenary meet in February decided to include Pakistan in the grey list by a consensus decision. The formal announcement in this regard is expected to be made at the forthcoming meet, according to people aware of the matter.

At the FATF meeting later this month Pakistan will have to not only submit an action plan to control terrorism funding but also give a political undertaking if it has to escape being grey-listed. If it fails to comply with the rules and an action plan is not adopted then the country runs the risk of being included later in the more serious ‘black list’ in the future. The black list currently features Iran and North Korea.

The motion to put Pakistan in the grey list was jointly moved by the United States and three key powers of Europe – UK, France and Germany. The plenary in Paris, between February 18-23 witnessed hectic negotiations from day one till the final day as India supported by its partners put forward strong arguments against Pakistan’s lacklustre efforts to control financing of terrorist groups.

The last-ditch efforts by Pakistan, including action against Hafiz Saeed, did not yield results and China and the Gulf Cooperation Council (GCC) finally agreed to put Pakistan in the grey list.

Support of three members of FATF is necessary to override the decision to put any country in the grey list. In Pakistan’s case, only Turkey extended assistance to its ally. FATF currently has 35 members and two regional organisations – European Commission and GCC.

If FATF goes ahead with censuring Pakistan, the country may suffer a risk downgrade by multilateral lenders such as IMF, World Bank, ADB and EU, and also a reduction in risk-rating by Moody’s, S&P and Fitch, according to an expert on Pakistan economy.